Nestle Corporation Properly Enjoined Under California's Unfair Competition Statute for Age Discrimination

October 1, 2003

By: Barbara L. McCully

California's Unfair Competition Law, Business and Professions Code section 17200, defines unfair competition to "...mean and include any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising...". In addition to the remedies of restitution and disgorgement of profits from a violation of section 17200, the statute provides for injunctive relief.

Although California's attorney general and other state agencies have taken steps to rein in the overuse and abuse of section 17200, plaintiffs continue to use the statutes as illustrated in the context of employment litigation as in Herr v. Nestle U.S.A., Inc., 109 Cal.App.4th 779 (2003) where, in addition to receiving a multi-million dollar verdict and attorney's fees of approximately $1.8 million, the court granted an injunction against Nestle restraining it from discriminating against employees on the basis of age.

In Herr, plaintiff began work for defendant at the age of 41 as an internal auditor and was promoted a year later to a manager position. Although he consistently received positive performance evaluations, his applications for further promotion were denied. The positions were filled by much younger persons having substantially less experience and in some instances, persons who did not meet the minimum criteria. The evidence at trial established that defendant had a preference for younger employees and that the failure to promote plaintiff was age-related.

In addition to prevailing on his claim for age discrimination under the Fair Employment and Housing Act ("FEHA"), judgment was entered in plaintiff's favor on his unfair competition cause of action and Nestle was enjoined from engaging in age discrimination.

On appeal, Nestle urged that judgment on the unfair competition claim must be reversed because (1) the law is designed to protect consumers and competitors, not employees, and (2) the remedies under the unfair competition law are cumulative to those under the FEHA.

The appellate court disagreed. It rejected Nestle's argument that age discrimination is an "internal matter" and is not injurious to competitors or consumers. In addition to finding that actual injury to competition is not required to prove a violation of section 17200, the appellate court found that, because older workers are frequently compensated more than their younger colleagues, an employer who practices age discrimination may have an unfair competitive age over employers who comply with the non-discrimination statutes.

The court also found that the remedies under section 17200 are cumulative to the remedies available under the FEHA and, therefore, were not duplicative.